Sage Advisory's Rob Williams on Liquidity Risk and More

“We’re an independently owned asset manager based in Austin, Texas,” said Williams. “People know us for bringing an institutional thought process to an ETF portfolio. We’re actually known as one of the pioneers in the managed ETF space.” He noted that Sage was using ETFs in fixed income portfolios as far back as 1999. The firm has about two billion in AUM in just ETFs, managing portfolios from all fixed income to all equity to balanced models in between.

Williams shared that though Sage Advisory has a cautious outlook on the year, they are fully invested. “On the fixed income side, we’re short duration,” he offered. He urged that investors should look at quality this year and not overreach on yields, which are good all around in fixed income. He also thinks it could be worth avoiding the overcrowded areas of the market like growth and momentum. Williams said, “I know diversification didn’t help you last year, I think its going to help this year.”

According to Williams, “equities have given you a gift with a big rally, a big year last year and a good start to the year. I think its good to have some duration in the portfolio.” He sees this fixed income has having enormous potential this year. “The window is open to extend duration and get some more fixed income in portfolio. Don’t think about rate sin the short term, think about rates in the medium term and where they are heading.”

Sage is focused largely on the U.S., though Williams noted that they also like Japan. Liquidity risk could also be a factor this year. “I don’t think people fully recognize the luxury of the excess liquidity the equity markets and risk markets have enjoyed the last eight to ten years.” A liquidity risk could derail the equity markets abruptly.

Williams praised Exchange for its ability to to connect Sage with its clients and create a welcoming event.

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